Good faith: Encyclopedia - Good faith

Good faith

Good faith, or in Latin bona fides is the mental and moral state of honesty, conviction as to the truth or falsehood of a proposition or body of opinion, or as to the rectitude or depravity of a line of conduct, even if the state is even if objectively unfounded. This concept is important in law.

One who acts in good faith, so far as the violation of positive law (or even in certain junctures of natural law) is concerned, is said to labor under an invincible error, and hence to be guiltless. This consideration is frequently applied to determine the degree of right or obligation prevailing in the various forms of human engagements, such as contracts (common law) and the law of obligations (civil law). In fact, good faith has been identified as the key essence of a contract, and the parties are expected to act in good faith in their dealings.

In the matter of prescription, good faith is held to be an indispensable requirement whether there be question of acquiring dominion or freeing oneself from a burden. Also, in deciding the duty incumbent upon one who finds himself in possession of another's property, cognizance is taken of the good faith with which perchance the holding began and was accompanied.

As the positive freedom of contract, this principle means that the formation of a contract and the selections of its terms are the result of the free will of the parties. Freedom of contracts admits contest between the contracting parties themselves as to the terms of the contract, but the value of reinforcing self-reliance and initiative, underlying any contest, is not absolute.

Categories: Legal terms | Contract law | Latin legal phrases | Equitable defenses

Adapted from the Wikipedia article "Good faith", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki